Coro­na­vi­rus: update on court rulings of rele­van­ce for businesses

All Fede­ral Sta­tes have issued gene­ral orders or ordi­nan­ces in recent weeks in an effort to curb the spread of the coro­na­vi­rus, which have included exten­si­ve rules for busi­nesses. As our over­view of key court rulings in recent weeks demons­tra­tes, not every com­pa­ny agrees with the­se rules, and some mat­ters are still unclear.

Mini­mi­zing the num­ber of new coro­na­vi­rus infec­tions in order to pro­tect our health care sys­tem from being over­whel­med is curr­ent­ly the top prio­ri­ty for poli­cy­ma­kers. Accor­ding to medi­cal experts, achie­ving this “flat­ten the cur­ve” effect requi­res mini­mi­zing social cont­acts, a goal which is enforced by a lar­ge num­ber of gene­ral orders and ordi­nan­ces from Ger­many’s Fede­ral Sta­tes. The­se new regu­la­ti­ons have affec­ted not only the pri­va­te lives of all citi­zens, but busi­nesses as well. In addi­ti­on to retail­ers, restau­rants have been espe­ci­al­ly hard hit by busi­ness clo­sures, but other com­pa­nies are also affec­ted, e.g. in view of their abili­ty to hold share­hol­der meetings.

In the first case in our over­view, the Admi­nis­tra­ti­ve Court of Min­den ruled by Order of 27 March 2020 (Case No. 7 L 246/20) that, while the order to clo­se an ice cream par­lor exceeds the bounds of the Coro­na­vi­rus Ordi­nan­ce in effect in the Fede­ral Sta­te of North Rhine-Westphalia, the order is still lawful, at least upon sum­ma­ry review in tem­po­ra­ry injunc­tion pro­cee­dings. The key argu­ment cited by the court is that, even if the busi­ness is rest­ric­ted to over-the-counter sales, the spring wea­ther could lead peo­p­le to crowd in front of the ice cream par­lor, which would run coun­ter to the object of pre­ven­ting new infec­tions. It also found that ice cream crea­ti­ons and spe­cial­ty cof­fees are “dis­pensable luxu­ries,” so that the order does not vio­la­te the pro­hi­bi­ti­on on dis­cri­mi­na­ti­on rela­ti­ve to other types of restaurants.

A simi­lar argu­ment is used by the Admi­nis­tra­ti­ve Court of Bava­ria in an Order of 30 March 2020 (Case No. 20 CS 20.611). In this case, the owner of a retail busi­ness alle­ged dis­cri­mi­na­ti­on rela­ti­ve to other busi­nesses which are not enga­ged in retail. Howe­ver, the Admi­nis­tra­ti­ve Court of Bava­ria found no dis­cri­mi­na­ti­on becau­se the peti­tio­ner remains free to ope­ra­te its store wit­hout coming into cont­act with cus­to­mers, e.g. by swit­ching to online sales or deli­ve­ring orders pla­ced over the pho­ne. It notes that the busi­ness pre­mi­ses may be used for inter­nal work flows.

By Order of 27 March 2020 (Az. 14 E 1428/20), the Admi­nis­tra­ti­ve Court of Ham­burg ruled on the clo­sure of fit­ness cen­ters and ath­le­tic and recrea­tio­nal faci­li­ties. The peti­tio­ner, the ope­ra­tor of a tram­po­li­ne park, was see­king a tem­po­ra­ry injunc­tion. It argued, among other things, that limi­ting the num­ber of cus­to­mers and increased mea­su­res to ensu­re good hygie­ne were suf­fi­ci­ent to avert the dan­gers posed by coro­na­vi­rus, so that a busi­ness clo­sure was not neces­sa­ry. The court did not share this view, poin­ting out that ope­ning the tram­po­li­ne park would lead to more peo­p­le moving around in public, regard­less of the num­ber of cus­to­mers in the park its­elf, and that the mea­su­res taken by the peti­tio­ner are not likely to have the same pro­tec­ti­ve effect as closure.

By Order of 26 March 2020 (Case No. 5 L 744/20.F), the Admi­nis­tra­ti­ve Court of Frank­furt refu­sed a peti­tio­ner’s request to issue an order can­ce­ling a share­hol­der mee­ting sche­du­led for 20 May 2020. The peti­tio­ner had argued that the share­hol­der mee­ting could not be held becau­se of the coro­na­vi­rus pan­de­mic. But the court poin­ted out that the peti­tio­ner had not even fur­nis­hed pri­ma facie evi­dence that the com­pa­ny plan­ned to main­tain this date. It also noted that the fede­ral govern­ment was con­side­ring a bill which sub­stan­ti­al­ly eases the rules for hol­ding share­hol­der mee­tings, such as allo­wing the mee­ting to be held online (aut­hor’s note: the bill has now been adopted).

By Order of 20 March 2020 (Case No. M 26 S 20.1222), the Admi­nis­tra­ti­ve Court of Munich also ruled on the clo­sure of retail busi­nesses. The peti­tio­ner was the ope­ra­tor of a jewel­ry store who argued, among other things, that he only allows one cus­to­mer into his store at a time and that he is the only one working in the store. He con­ten­ded that, due to the­se cir­cum­s­tances, a crowd of peo­p­le could never form and that pro­tec­tion from infec­tion was ensu­red. The court ack­now­led­ged that the pro­tec­ti­ve mea­su­res taken by the peti­tio­ner are sui­ta­ble mea­su­res for pre­ven­ting the uncon­trol­led spread of the infec­tion among the peti­tio­ner’s cus­to­mers but poin­ted out that the poli­ce can hard­ly moni­tor com­pli­ance with the­se mea­su­res by way of broad-scale enforce­ment and that, espe­ci­al­ly for lar­ger stores, the dan­ger exists that crowds of peo­p­le could form in front of the door. Accor­din­gly, the court rejec­ted the petition.

On the same date, 20 March 2020, the Admi­nis­tra­ti­ve Court of Munich issued an Order (Case No. M 26 E 20.1209) in ano­ther mat­ter. In that case, an ope­ra­tor of three stores sel­ling foot­wear, appa­rel and gifts argued, among other things, that retail­ers are being trea­ted in dis­cri­mi­na­to­ry fashion rela­ti­ve to other sec­tors, such as craft­smen, online ven­dors and mail order com­pa­nies, even though the risk of infec­tion is the same or even hig­her for tho­se groups. The Admi­nis­tra­ti­ve Court of Munich did not share this view and poin­ted out that it is par­ti­cu­lar­ly the case in retail that peo­p­le typi­cal­ly come tog­e­ther in per­son, so that a fun­da­men­tal dan­ger exists. It noted that the recom­men­da­ti­on to adhe­re to mea­su­res to ensu­re good hygie­ne may be sui­ta­ble to curb the spread of the virus, but that it is hard­ly pos­si­ble to moni­tor such mea­su­res. Final­ly, the Admi­nis­tra­ti­ve Court of Munich found that the dif­fe­ren­tia­ti­on in the law bet­ween indi­vi­du­al types of busi­nesses is lawful, not­ing that the natu­re and pur­po­se of ser­vice busi­nesses, and by exten­si­on their risk poten­ti­al with regard to a virus infec­tion, are too varied to be dealt with by means of a gene­ral order and that the risk in con­nec­tion with online sales is not com­pa­ra­ble, as the peti­tio­ner had alleged.

In a direct appeal against a busi­ness clo­sure, the Order of 3 April 2020 from the Admi­nis­tra­ti­ve Court of Bre­men (Case No. 5 V 604/20) demons­tra­tes that cer­tain aspects are still unclear for busi­nesses in con­nec­tion with lar­ge num­ber of new regu­la­ti­ons. In this case, a tile store appea­led its clo­sure by the aut­ho­ri­ties based on a gene­ral order. The tile store argued that it was exempt­ed from the gene­ral order becau­se it qua­li­fied as a “home impro­ve­ment store.” But the Admi­nis­tra­ti­ve Court of Bre­men rejec­ted this argu­ment, not­ing that a home impro­ve­ment store dif­fers from a spe­cia­li­zed ven­dor becau­se the breadth of its assort­ment con­tri­bu­tes sub­stan­ti­al­ly to ensu­ring that the needs of the public are met. It the­r­e­fo­re ruled that law­ma­kers can dif­fe­ren­tia­te bet­ween home impro­ve­ment and spe­cial­ty stores becau­se home impro­ve­ment stores are abso­lut­e­ly neces­sa­ry in order to enable “neces­sa­ry and urgent repairs.”

On the who­le, it is evi­dent from the rulings pre­sen­ted abo­ve that legal actions against the mea­su­res taken by the aut­ho­ri­ties have thus far had litt­le suc­cess. When weig­hing the inte­rests of the various par­ties, which they are requi­red to do befo­re ruling on a tem­po­ra­ry injunc­tion, the courts typi­cal­ly point out the over­ri­ding dan­ger posed by the coro­na­vi­rus and note that any other legal ques­ti­ons can be cla­ri­fied in the main pro­cee­dings. But at the same time, it is also evi­dent that the exis­ting rules are often unclear and allow for a wide ran­ge of dif­fe­rent inter­pre­ta­ti­ons, some­thing which needs to be addres­sed. Par­ti­cu­lar­ly in bor­der­line cases, such as the ques­ti­on as to whe­ther a store qua­li­fies as a spe­cial­ty store or a home impro­ve­ment store, it may be expe­di­ent to seek legal advice as well as inqui­ring with the com­pe­tent authorities.

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